Card-Linked Offers: An Easier Route to Rewards?

If you love discounts and deals, take note: Issuers and retailers are experimenting with a new way to more seamlessly reward consumers.

Card-linked offers — deals tied to a credit or debit card loyalty program — are growing in popularity for several reasons, experts say. For one, consumers are more deal savvy than in the past, partly due to the lingering effects of the recession. Plus, while many consumers love daily deals with steep discounts (think Groupon), these aren't always a bargain for retailers, who slash prices to lure in a new customer who might never come back after redeeming the deal.

As a result, card issuers and merchants have moved toward partnering on card-linked offers, which help companies give consumers the deals they crave while building loyalty and getting repeat business.

“Everyone benefits,” says Tom Beecher, CEO of Cartera Commerce, a company that provides card-linked marketing services for issuers, banks and other companies.

How card-linked offers work
Card-linked offers work in slightly different ways, depending on the program. In general, though, you sign up for a program through your credit or debit card issuer or through a store loyalty program. Then you begin getting offers for deals, usually via email or through a smartphone app. You can cash in on the offer if you make a purchase using a payment card linked to the program.

Depending on the program, the percentage you save could get taken off of the purchase price, show up as an account credit on your credit card statement or get deposited back into your checking account.

There are two main types of card-linked offers:

Offers connected to your credit or debit card: Your card issuer teams up with an online or brick-and-mortar retailer or other company to give you a deal if you buy something with your card. An example of this type of card-linked offer program is BankAmeriDeals, an online and mobile deals program for Bank of America customers that launched in 2012. With BankAmeriDeals, offers from companies such as Auto Zone, FedEx Office and The Body Shop pop up when consumers are using online banking. The customer selects the deal and shops at the retailer, and the cash back is automatically deposited into the consumer's account.

Offers tied to frequent flier or store loyalty programs: Customers sign up, link a credit or debit card they will use to make purchases and then begin getting offers. For example, if you belong to an airline frequent flier program, you might get an email offering you 10 frequent flier miles for every dollar you spend when you click a link and make a purchase at a certain online retailer, Beecher says. “You'd then get an email saying, 'Congratulations, 1,000 extra miles have been posted to your account,'” he says.

Taking advantage of card-linked offers
Because they encourage spending, card-link offers have clear advantages for retailers and card issuers. But they can also be good for customers who use them wisely:

1)Offers come right to you. With card-linked offers, you don't need to buy the Sunday paper, sift through hundreds of coupons online or remember to check your favorite bargain blog. Instead, the offers come to you, usually via email or phone. Some programs use technology to send you offers when you arrive at a store. For example, you might check in at Burger King via Foursquare and then get an offer on your phone for $1 off when you spend more than $8, says Kevin Knowles, a vice president of product development for First Data, an electronic commerce and payment processing company. If you buy enough burgers using the credit or debit card you registered for the program, you'll get a message telling you to expect a statement credit to post to your account in three to four business days, Knowles says.

2) Offers can be targeted to you. If you're addicted to mani-pedis and massages, you might be excited to get a special offer for a discount at a day spa. On the other hand, if your favorite store is Wal-Mart, you might have no interest in a cash-back deal from Nordstrom. Your card issuer knows your purchasing habits, and that makes it easy to target offers. Card issuers are looking for new ways to provide value to their cardholders, says Knowles.

“The ability to target relevant offers is pretty powerful,” he says.

3) Card-linked offers are easy to redeem. One of the biggest benefits of these offers is that consumers can redeem them with a few clicks or a swipe.

“You no longer have to print coupons or carry around key fobs full of store loyalty program cards,” Knowles says, noting that your loyalty program information gets linked to the credit or debit card you register with the program when you sign up.

4) You sometimes get a doubly good deal. If, for example, a frequent flier program offers you extra miles for making a purchase at an online retailer, you might get a discount or perk such as free shipping with the online retailer, too, Beecher says.

“Sometimes you can kind of double dip,” he says. And, if you're using a rewards card to make the purchase, he notes, “you can triple dip.”

One drawback with this type of rewards scheme is that it may take a while for the cash-back reward to get credited to your account. BankAmeriDeals, for example, credits you at the end of the month after you make the purchase.

The main downside, however, is that you won't usually see major price slashing the way you might with a Groupon-type deal. That's because card issuers and merchants are using these offers to build loyalty over time, rather than offering one bargain that can't be refused just to get a new customer in the door.

“You'll usually see good deals but not crazy good deals,” Beecher says. “But you will see them over and over again.”

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